VMware Acquires Nicira for $1.26 Billion

VMware has acquired Nicira, a software defined networking startup which specializes in open source software for virtualized networking. VMware, which is one of the largest players in the server and data center virtualization space is now looking to expand in the network virtualization space. Nicira was one of the best acquisitions it could have made to get a quick headstart in a space which is bound to get very competitive in the coming years.

Nicira is a relative newbie in the enterprise networking market, which is dominated primarily by the likes of Cisco and Juniper.

Nicira was backed by top VC firms including Andreessen Horowitz. According to Ben Horowitz, the synergies VMware will derive from this acquisition are well worth the acquisition price.

“In one bold step, VMware moves from a footnote in the networking market to the clear technology leader in Software Defined Networking and more specifically—and importantly—Cloud Networking.

By combining Nicira’s technology with VMware’s market-leading server virtualization and cloud products, VMware today creates a clear path to becoming the most important infrastructure company across servers, networks and storage for the next 10 years.

As current networking architectures migrate to cloud architectures, VMware has the opportunity to eat a good portion of the $37B data networking market. In that light, $1.26B is a great price.”

With Nicira’s technology, VMware can leverage its expertise in server virtualization and become a major player in the rapidly growing networking space. Nicira already has a pretty sizable roster of clients like AT&T, eBay and Fidelity for its Nicira Network Virtualization Platform.